Morgan Stanley Q4 Profit Misses On Bond Trading

by Ike Obudulu Posted on January 21st, 2019

New York City, USA : Morgan Stanley (MS) Morgan Stanley announced fourth-quarter earnings adjusted profit of 80 cents a share, lower than the 89 cents expected by wall street analysts.

Morgan Stanley said net income rose to $1.5 billion from the prior year, but that missed analysts’ $1.6 billion estimate.

The Wall Street bank said fixed-income trading revenue had fallen 30% to $564 million, the worst performance for that unit in three years.

Here are the key numbers:

  • Revenue: $8.5 billion, a 10% decline from last year and a miss to Wall Street’s prediction of $9.4 billion.
  • Adjusted net income: $1.5 billion, up 138% from the prior year when a change to the tax code battered earnings. Analysts had predicted $1.6 billion.
  • Institutional securities: $3.8 billion, down 15% from the prior year. Fixed income trading slumped 30% to $564 million. KBW analysts had predicted $4.1 billion for the division, and $646 million for fixed-income trading.
  • Wealth management: $4.1 billion, down 6% from the prior year. KBW analysts thought the bank’s biggest division may bring in $4.3 billion in revenue.
  • Investment management: Revenue of $684 million, up 7%. KBW analysts predicted $676 million.

Fourth Quarter Business Overview:

  • Firm net revenues were negatively impacted by the volatileglobal market environment.
  •  Institutional Securities net revenues reflect strong results in investment banking with particular strength in M&A advisory and solid results in equity sales and trading. Lower performance in fixed income sales and trading reflects the market volatility.
  • Wealth Management net revenues were $4.1 billion with a pre-tax margin of 24.4%. Results reflect the difficult environment, seasonality and certain compensation-related items.
  • Investment Management net revenues were $684 millionwith AUM8 of $463 billion.

Full Year Business Overview

  • Record net revenues in Investment Banking of $6.1 billion; Investment Banking Ranked #1 in Global
    Completed M&A, Global IPOs and Global Equity.15
  • Record Wealth Management net revenues of $17.2 billion on strong management fees and increased net
    interest income; Pre-tax margin of 26.2%7reflecting continued operating leverage.
  • Investment Management reported strong asset management fees and positive long-term net flows.

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